The Composition and Drawdown of Wealth in Retirement.

A s the “baby boomers” approach and enter their retirement years, the accumulation phase of their life-cycle is nearly over. Thus, the focus of many researchers, fi nancial services fi rms, and public policymakers concerned with retirement saving is shifting from the accumulation of resources while working to the drawdown of resources during retirement. Retired households are dependent on the annuitized income streams that they have built up during their working careers and on the wealth that they have accumulated in other forms. The two most common annuitized income streams are Social Security benefi ts and the payments from defi ned benefi t pension plans. These payout streams provide income for life—and thus provide some protection against falling into poverty if one lives an especially long life. The three most common sources of accumulated wealth are equity in an owner-occupied home, fi nancial assets such as bonds and stocks, and fi nancial assets held in a personal retirement account such as an Individual Retirement Arrangement or a 401(k) plan. Throughout our analysis, we will defi ne “retirement-age households” as those headed by someone between the ages of 65 and 69. In 2008, just over 80 percent of these households had some equity in their home or another property, while 52 percent The Composition and Drawdown of Wealth in Retirement